Allergens and pathogenic bacteria and viruses induce and exacerbate asthma by mechanisms that are not yet understood. While asthma can be controlled, many patients do not respond to standard treatments and can develop serious complications. Consequently, there is an urgent need for innovative strategies to develop novel therapeutic targets. Based on our own data and others, it is becoming clear that macrophages contribute to the pathophysiology of asthma. Macrophages differentiate into several functional phenotypes with markedly distinct characteristics. Macrophages treated with LPS/IFN? undergo classical activation, express high levels of iNOS, and establish a strong proinflammatory response to kill intracellular bacteria. On the other hand, IL-4-treated macrophages undergo an alternative activation. These cells, termed alternatively activated macrophages (AAM), express high levels of arginase I and YM1/2, and establish a phenotype that is important for tissue repair and immune responses to helminthic parasites. We have found that AAM directly contribute to the severity of allergic asthma. AAM are also permissive for growth of intracellular bacteria. Thus, understanding the mechanism by which AAM differentiation is regulated is significant. We have shown that IL-4-induced AAM differentiation is dependent on STAT6. However, we do not understand how the differentiation of macrophages to the AAM type is controlled downstream of STAT6, representing a gap in knowledge. We found that IL-4 dominantly controlled the differentiation of macrophages to the alternative state, even in the presence of other cytokines. Furthermore, using gene expression arrays and a novel Egr2-EGFP reporter mouse, we found that IL-4 rapidly and potently induced the expression of the transcription factor Egr2 in a STAT6-dependent manner, preceding the induction of AAM signature genes. Based on these results, we propose that IL-4 drives AAM differentiation and function by inducing the expression of Egr2 thereby controlling macrophage phenotype. Therefore, in this R21 we will develop new mouse models to track Egr2 positive macrophages and determine the impact of Egr2 on AAM differentiation in vitro and in vivo. The specific aims designed for this exploratory study are 1) to determine whether Egr2 is necessary and sufficient to promote AAM differentiation in vitro, 2) to develop novel mouse lines to assess the role of Egr2 in AAM differentiation in vivo, and 3) to determine whether Egr2 is necessary for AAM differentiation in vivo. These studies are novel, and high risk/high impact because they will define a gene downstream of STAT6 that is responsible for alternative macrophage differentiation. The characterization of Egr2 as a transcription factor that controls AAM differentiation will have high impact in the field of Type II inflammation as it may lead to the development of Egr2 as a new therapeutic target for asthma and infection.